What is an earnest money deposit?

An earnest money deposit (EMD) is a sum of money that is made to secure an offer to buy residential real estate in Virginia. This is usually a deposit of a portion of the total sale price made by the buyer to the seller. An EMD is an assurance to the seller that the buyer is serious about the purchase, and it can be referred to as a “show of good faith”. The deposit is fully refundable to the buyer in certain circumstances, such as if the buyer cannot qualify for a mortgage or fails to meet the terms of the contract. However, if the buyer decides to back out of the sale without reasonable cause, the EMD generally becomes the property of the seller. In Virginia, the EMD should be held in trust by a third-party escrow agent, such as a real estate attorney, broker, or title company. This ensures that the money is kept safe until the closing of the home wehre it is credited to the buyer at closing.

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What is an earnest money deposit?

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